EPCA’18: No new capacity expected in Europe acrylate markets amid unattractive margins

Source: ICIS News

2018/10/11

VIENNA (ICIS)--There is not expected to be any new capacity in the European acrylates esters and acrylic acid (AA) market, with margins currently unattractive for further investment.

Sources discussed the future supply and demand balance on the sidelines of the European Petrochemical Association (EPCA) meeting this week.

Despite prices increasing in the last two years, it has not been to the extent that sellers would consider building new facilities in the region.

This is a concern to the market, given the ageing assets in the region, frequent production hiccups in the last two years and the expected growth in demand.

Supply is currently well balanced in Europe, but has moved from balanced to tight throughout the year amid planned and unplanned production stoppages.

There are worries in the market over the potential of a major production issue, with limited regular options from overseas as an alternative.

There is talk of increased capacity in the US, with higher utilisation of existing capacity and reactor changes.

Margins are a concern throughout the supply chain, with downstream businesses also feeling the squeeze amid higher feedstock prices.

This will continue into 2019 with upward pressure on key feedstock propylene, amid a balanced-to-tight longer term supply picture.

Competition downstream is exacerbating poor margins, with players compromising on pricing in favour of market share in 2018.